One of the great things about buying from Amazon is that unless you live in the state of Washington (where Amazon is headquartered), you do not need to pay sales tax. That means a lot of people are able to save money purchasing from the giant online retailer. The same goes for other online retailers who aren’t located in the state that you reside in, they too are able to ship items to customers without needing to collect taxes. Unfortunately our tax-free days may be coming to an end if other states follow in the foot-steps of New York.
New York’s Governor is expected to sign a bill which has already been approved by New York legislators called the “Amazon Tax Bill.” If the governor signs it, online retailers (not just Amazon) would be forced to charge sales tax to customers who live in the state of New York. If there ever was a way to kill online retailers, this could be it. It’s been estimated that this new tax bill could bring in an extra 50 million dollars for the state. What state out there wouldn’t want an extra 50 million dollars right now? As you can imagine, experts predict that other states will follow in the footsteps of New York so that they too can bring in extra revenue.
People aren’t too happy about the thought of paying tax on the items that they purchase online. Someone who is happy about this though is James Sherin who is president and CEO of the Retail Council New York. He said, “This is a first step — but a critical one — in our ongoing battle to level the sales tax playing field between New York retailers and the out-of-state Internet giants that have, for years, capitalized on an unfair and unintended competitive advantage driven solely by tax policy.”
This is one of those matters that would be better off left to the Federal Government to regulate and not each state. Retailers are going to have one heck of a time trying to keep up with all of the different tax laws in each of the states and making sure that they are charging customers the correct rates! It makes you wonder if the legislators really thought this through and how it will impact Internet commerce. The smaller Internet retailers really don’t stand a chance because they won’t have the money to spend to make sure they are complying with all of the different laws in each of the different states.
It’ll sure be interesting to see what comes of this…
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So their reaction to a looming recession is to raise taxes so people spend less - genius
Of course, John, NY is run by Democrats. They love taxes even more than the pre-2006 Republicans. They’d rather have a larger piece of a smaller pie than a smaller piece of a large pie, even though that means they will ultimately have less tax revenue. Typical politicians, punish the citizens for the decisions made by the political “leaders.”
This won’t go anywhere. New York doesn’t have taxation authority on entities which don’t have a physical presence inside the state and they can restrict inter-state trade without dissolving the Union. They can force collection of sales taxes if the delivery and shipping address are within the state of New York which…will increase the cost for New York businesses and consumers leading to fewer in-state sales. The higher the cost of business overhead, the higher the disincentive to conduct business.
It actually makes me wonder whether this could lead to businesses moving out of the state to avoid the extra burden.
In both of the states in which I’ve paid state taxes, you’re supposed to estimate the amount of out-of-state purchases on your tax return and pay sales taxes then. Since this was pretty much unenforceable, (and I’ll get off my high horse enough to admit that I have usually severely underestimated my online purchases) they’re just trying to find a way to enforce it.
I’m just saying that it’s not a huge shift in tax law, just putting the burden of reporting on the retailers. While the large retailers should have no problem keeping up with the law, it’ll probably be tough on small home businesses without a middle man to take care of all the hassle.
It seems to me that online prices will often still be cheaper than those at local stores, especially since free shipping is becoming so prevalent.
I’m worried about the small businesses as well. I would have to agree that it would still be cheaper to purchase online with or without the taxation, but on some purchases the difference can be quite drastic. For example, purchasing a computer online is typically quite a bit cheaper than stores because for many states they are tax-free. That can save over a hundred dollars depending on the type of computer.
Well, we all knew this was coming - New York is right, you can’t collect sales tax from all of your state’s retailers and then let internet retailers compete with them tax-free - its doesn’t really make any sense, and it affects *existing* tax revenue.
I am not looking forward to paying sales tax on Amazon, but as a small businessman I am glad for the local smaller businesses.
Seriously - WHO is worried about Amazon or other internet retailers? I mean, Amazon is a billion dollar business - why not be worried about all the mom and pop businesses that went OUT of business because of Amazon?
Amazon.com started as a small business and was better at business than their competitors. The market rewards that. If Mom and Pop can’t compete, the market removes them and everyone benefits. Mom and Pop can go do something else. That’s life. Don’t like it? Tough. A free market seeks to provide the most options at the lowest cost to the consumers, not subsides for people who can’t differentiate between being in business and playing at business.
You raise a good point there Fred that nearly all of the “big” stores out there started small and may have even been a “mom n’ pop” type of place. Now I’m curious how Amazon started out and how long it took them to become what they are today. Time to go research…
This isn’t sound economic thinking as several of you have pointed out, but then again since when has our government made any sound economic decisions…
The New Deal which didn’t cause the end the Great Depression, regrettably expanded the federal government massively, many of the programs actually worsened the problems they were trying to solve (e.g. The Social Security Act). Getting off the gold standard, which allows the federal government to print money out of thin air, not being backed on anything. This has caused our government to try and buy our way out of bad economic times and to print excessive amounts of money to pay off our national debt, which has done nothing but destroy our currency and hasn’t reduced our debt b/c of the amount of money needed to fund the big government we have today (whether it be for the war, or all the new government organizations created in recent times).
Well I won’t go continue my rant any further… the point being we shouldn’t expect sound economic thinking from the government, as I haven’t seen any sound economic reasoning from them in the past century.
Furthermore, saying this won’t have an impact is questionable. New York state tends to be the trend creator for other states, as they were with the no cell phone while driving law which several states adopted after new york set the precedent.
This could just further the outsourcing of businesses and thus jobs from states like New York to other states, or worse if many states in the union start adopting similar legislation.
This is something state and federal government has wanted to do for some time. A government that size of the U.S. is always trying to find ways to sustain their size, which often comes in the form of many new forms of taxation of their people.
The U.S. government has been headed for some time now down a path of destruction, whether it be threw their unsound economic reasoning, or through how Orwellian our big government (*cough* Big Brother *cough*) has become.